Last week, the U.S. Supreme Court, in Facebook, Inc. v. Duguid, held that in order to be defined as an automatic telephone dialing system (also known as an autodialer) under the Telephone Consumer Protection Act ("TCPA"), equipment must use a random or sequential number generator. In reversing the Ninth Circuit's judgement against Facebook, the Supreme Court ended what has been an ongoing debate among the Circuit Courts over the autodialer definition. This has great consequences for companies that call or text consumers, limiting both the compliance requirements and legal risk of $500-$1,500 in statutory damages per call/text. In this article we examine the Supreme Court decision, describe how we got here, and discuss key takeaways businesses should know.
The question before the Supreme Court, here, was whether the autodialer definition encompasses equipment that can store and dial telephone numbers, even if the device does not use a random or sequential number generator. And, the Supreme Court's holding is unequivocal, with the Justices stating: "The statutory context confirms that the TCPA's autodialer definition excludes equipment that does not use a random or sequential number generator" and "Congress' chosen definition of an autodialer requires that the equipment in question must use a random or sequential number generator." The unanimous decision was written by Justice Sotomayor, with one concurring opinion by Justice Alito.
So, that resolves the Circuit split, and the whiplash that TCPA followers have been feeling for the last 6 years. As we have described in previous posts, a lot of the debate on what constituted an autodialer focused on the statutory interpretation. The language in question states that an autodialer is defined as equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers. The FCC brought this issue to the forefront in its 2015 TCPA Omnibus Declaratory Ruling and Order, when it broadened the definition by asserting that a device merely had to have the future capacity to random/sequentially dial to be an autodialer (see our post). Then in ACA International, et al., v. Federal Communications Commission, the DC Circuit Court threw out portions of the 2015 Order, including the autodialer definition, holding that the definition was an unreasonably expansive interpretation (see our post). Other Circuit courts then jumped in with their interpretation of the autodialer definition, including the Ninth Circuit which defined it broadly (see our post). According to the Ninth Circuit, to be an autodialer the technology does not need to use a random or sequential generator to store numbers; it need only have the capacity to "store numbers to be called" and "to dial such numbers automatically." It is this Ninth Circuit decision that was before the Supreme Court in Facebook, Inc. v. Duguid. The Supreme Court concluded "that the clause modifies both, specifying how the equipment must either "store" or "produce" telephone numbers. Because Facebook's notification system neither stores nor produces numbers "using a random or sequential number generator," it is not an autodialer.
The facts considered by the Supreme Court, here, were that Duguid received text messages from Facebook as part of an optional security feature that sends users login notification when an attempt is made to access their Facebook account from an unknown device or browser. But Duguid didn't have a Facebook account and didn't give Facebook his number. The Supreme Court indicated that Facebook had a plausible explanation for why this happened; Duguid may have been assigned a recycled phone number "that previously belonged to a Facebook user who opted to receive login notifications." (Note that the FCC has interpreted "calls" under the TCPA's autodialer restrictions to cell phones to encompass text messages, and the lower courts have followed.)
TCPA Still In Force: The Supreme Court did not strike down the autodialer restriction, nor any portion of the TCPA, it simply clarified the definition of autodialer. So, if your business uses a device that involves randomly or sequentially storing or producing numbers, the autodialer regulation still applies in full force. Also, this holding does not touch the TCPA's other requirements, including restrictions regarding artificial and prerecorded voices, and faxes.
There is Still a Threat of Litigation: Even though the decision settles a Circuit split, there are still a lot of open issues and the threat of litigation still looms. As is sometimes the situation with Supreme Court cases, footnotes, here, reveal quite a bit. Although the Supreme Court is rather clear that to be an autodialer equipment/technology must use a random or sequential number generator, exactly what constitutes such a technology is still arguable. Footnote 7 gives some guidance:
"For instance, an autodialer might use a random number generator to determine the order in which to pick phone numbers from a preproduced list. It would then store those numbers to be dialed at a later time."
However, this is just one example. We think that plaintiffs' counsel will be able to find other technologies or processes that may be interpreted as autodialer under the newly clarified definition, which could lead to litigation. In addition, creative plaintiffs' attorneys may make new TCPA claims outside of the scope of the autodialer issue the Supreme Court ruled on or with new vigor for claims regarding the availability and honoring of opt outs. At the same time, the plaintiffs' bar will probably seek other avenues to bring cases, such as looking to state mini-TCPA laws, claiming unfair or deceptive business practices, or focusing on other statutes and situations (e.g. accessibility of websites under the Americans with Disability Act ("ADA") and similar state and local laws).
Another footnote could spark a new series of lower court decisions that analyze whether texts really should be considered calls under the TCPA. In Footnote #2 the Supreme Court states:
"Neither party disputes that the TCPA's prohibition also extends to sending unsolicited text messages. See Campbell-Ewald Co. v. Gomez, 577 U. S. 153, 156 (2016). We therefore assume that it does without considering or resolving that issue."
As we discussed in our post about oral arguments in this case, Justice Thomas raised the issue of whether texts should be considered calls under the TCPA, and this footnote seems to be a way for the Supreme Court to set that issue aside, for now, while keeping the door open for defendants to use this argument.
Consent May Be Streamlined, but Consent Is Still Recommended: Some calls still clearly require consent (for example, telemarketing using an artificial or pre-recorded voice) and – at least until there is further FCC and carrier guidance and other relevant laws are considered – we strongly recommend obtaining consent from consumers, providing the material disclosures for what they are agreeing to receive, and honoring opt-outs. However, the specific disclosures previously required for telemarketing "calls" to mobile phones using an "automatic telephone dialing system" will not be absolutely necessary unless your telephone dialing system stores or produces the telephone numbers it calls using a random or sequential number generator.
Do Not Call Lists Still Applicable: Just because your business does not use technology that randomly/sequentially stores/produces numbers, this does not mean that your business can just randomly call consumers without considering compliance measures. The federal and state do not call lists are still applicable.
There Are Still Carrier and Service Requirements: For those that engage in text message campaigns, the carrier requirements still apply. And, if you use a third-party service to send your text messages, your contract provisions may require a level of consent that you must still comply with.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.